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Property tax, take two: the lessons to be learned

Edel Morgan

This time "mohair-suited, suede-booted, high-living bachelors" won't escape the net

Back in 1983 when the residential property tax was introduced by the Fine Gael/Labour coalition, Olivia O’Leary asked in The Irish Times if people would be penalised for home improvements that could add value to their home. “For instance will the elaborate pine fittings be assessed? Will it be a tactical necessity to ensure that built-in cupboards and permanent fittings are kept to a minimum?” she wrote.

And we could ask the same question about the value-based residential tax to be introduced before 2014 as a requirement in the EU/IMF programme of financial support for Ireland.

Elaborate pine fittings might have had a positive effect on suburban house prices back in the 1980s but nowadays they would have the opposite result (which might, in fact, herald their return?). If the Celtic Tiger sparked a vanilla-gloss kitchen and glass box extension show-off fest among neighbouring properties, will the introduction of a value-based property tax see people race to have the most unremarkable house on the street?

After all, how much more can people expect to pay in tax if they were to renovate a property to a high standard or build on an extension?

In May 1983 a 1.5 per cent tax was levied on people’s principal residence where the market value exceeded £65,000 and the household income exceeded £20,000. Home owners were required to make a tax return stating the value of their property and failure to do so could result in Revenue making its own valuation. If they got the valuation wrong and sold the property, they had to refund the difference. This time around, the tax is expected to be much broader, with fewer people exempt, but will still be based on a percentage of the market value of a property. It will be levied on family homes and investment property and, we as yet don’t know if property owners will be required to furnish a valuation by a professional .

By then we’ll presumably have, the national house price register to help determine property values but it will only date back to 2010 . House sales have been sluggish to say the least since then so what if a house comparable to yours hasn’t been sold on your street in recent times?

In the 1980s people were up in arms about the tax, there were protests, a High Court challenge to its constitutionality (The Court ruled it was not unconstitutional) and defaulting on a grand scale, until it was scrapped in 1997. However, with stamp duty no longer providing a stable revenue, a property tax has been on the horizon for some time and now the challenge for the government is to avoid repeating the mistakes of the past.

In a small ad in The Irish Times pages on September 29th 1989 accountancy firm Ernst & Whinney summed it up.

Good News

The value of your house has increased….

Bad News

You have to pay residential property tax on Ist October.

Back then the tax did not apply to people with substantial property holdings whose private residences were worth less than €65,000. John Kelly FG remarked in the Dáil in 1983 “One could be a mohair-suited, suede-booted , high-living bachelor living in a rented flat worth £64,000.Such a bachelor might own a street of houses where other people lived – he could be the beneficial owner of the entire Pembroke Estate – yet not one penny would he be taxed because he rented his main residence.”

This time mohair-suited, suede-booted high-living bachelors won’t escape the net, because it seems that this time, investment properties will be liable for the tax.

Property tax? Aren’t some people already paying NPPR to local authorities and have to fork out for PRTB fees. Double taxation here, triple taxation there. If the govt. continues in this manner there’ll be very few people left in the country to tax.

The Irish govt has learned well from the British landlords of yesteryear. Similar results too. People going cold and hungry because they’re being squeezed from the top, bottom and at the sides. Maybe the Brits weren’t so bad after all?

This government clearly cannot see the wood from the trees. A property tax based on a valuation is madness. Why are the Government ignoring the much simpler option to tax based on size in square meters. No one really knows the value of property any more…. especially if, as suggested in this property section a week or so ago, sales are going to take place with a portion being “cash under the table” and the remainder recorded on the deed. A tax based on square meters of the property as well as the site it stands on is a sensible basis. That way a 100 square meter apartment will attract a lower tax (as is only fair!) than a 100 sq meter house with it’s own front, rear or indeed side garden! A tax based on size is the fairest. A small house in Dublin could be worth more than a MacMansion in the countryside. Should someone in a smaller house really pay a larger tax?

Yes Laura it’s going to be a tricky one. The impending house price register will help but can valuation system take into account all the nuances. What about a road where there are lots of different house types and one house type hasn’t come on the market for a long time – how will value be determined? A tax based on size could be the way to go but will people who paid €200,000 for a huge house in CAvan feel aggrieved if they have to pay more property tax than someone who paid €3 million for a smaller house on Ailesbury Road ?

Now Now, don’t be so literal….just thought he looks like the “mohair-suited , suede booted, high living bachelor” with a string of properies mentioned in my blog that was escaping paying property tax in the 1980s

In Britain tenants pay council tax; why not in Ireland? I had to emigrate and rent my home as my freelance work dried up. Now I’m being asked to pay TWO property taxes while our public services remain unreformed! I had hoped to return to my home one day, but if this tax, a precursor to much higher taxes in 2014 means I have virtually no income, I shall have to sell out and take the now 30% capital gains hit. And in justice, why should I pay for services I don’t receive? There must be many like me, but we won’t be heard as we are just emigrants and quickly forgotten.

If we accept paying less then €2 a week now, do you think it will still be less then €2 a week the year after or two years from now? what will you do if and when it comes to €20 a month or more then that? its obvious the €100 a year charge is only a foot in the door tactic to get people to say that, s not much I can afford that, once you say that and accept it, just watch as the goverment rack up the property tax each and every year afterwards.

Its time to now to take a stand and refuse to pay any property tax, if we don, t do it now, we will look back in a good few years time when property tax could be say €1000 a year and wonder why didn, t we resist when they tried to get a foot in the door?

In regards to the property tax, for anyone that, s opposed to it, there is a national boycott campaign being built that, s underway, w…e have already held many succesful meetings around the country in galway, cork, waterford, donegal, kilkenny, …where the majority who have attended these meetings have agreed non payment is the only way to go, and remember if you decide to boycott it and not pay it, you won, t be by any means on your own, there are others like minded people who feel the same way, who have signed up to this campaign, check your local newspapers for meetings in your local area.

For everyone against the household charge/property tax, please share this link on your facebook wall and ask all your friends to sign up to this campaign, we shall be stronger in numbers-we shall be one-we shall be many.http://www.nohouseholdtax.org/

The thing is Selma, we are one of the few countries in Europe that doesn’t have an annual property tax , while we’ve had a stamp duty regime like the UK but that revenue has all but dried up and the tax is a requirement by the EU/IMF. Much as it’s another tax that many of us who are already struggling to make ends meet can’t afford the issue is not so much whether it’s coming in but whether it will be applied fairly.

In the UK, property/council tax is paid by the tenant. Often it is in excess of £1,000 for a modest 3-bed house in London & charges vary by council. The owner is liable for the tax when the property is unoccupied even just for a couple of days (though at a discounted rate).

Investors will leave the property market if property tax rises to these levels + PRSI on income + PRTB + NPPR and that’s after falling capital values and much reduced rents

The EU/IMF dont really care where we get the money from as long as we get it. A tax on your house is an immoral tax especially when significant stamp tax has already been paid. And it will incease to average levels of €600 plus. Mass non payment is the only way to defeat it. I feel the campaign would be better placed to concetrate on property tax and not muddy the water with the water tax issue (another example of double taxation). Its also unfortunate that the left leaning campaign will put off many citizens from supporting the campaign. However, I do fear that miiddle Ireland will let this tax slip in quietly. I personally will not pay it and would encourage all others to do the same.

This thing is going to be a nightmare.
What about people who are already on welfare? What about pensioners?
What about people on low income living in unsellable property because of location or flooding issues who can neither sell or pay?

The only viable system is one which will have a ceiling limited to a fixed proportion of the household income irrespective of the value or size of the house.
I would posit 0.15% of the valuation – but no one having to pay more than 2% of adjusted household income. Adjusted household income being the total household income, less the rent or mortgage. eg For a pensioner couple living in a €300K house this would be €88 rather than €450.
However, I fear the enonomists would see this as inefficient. Economic efficiency is forcing pensioners to sell their family homes and move to granny flats where they can die as soon as possible, and before they can draw down too much of their pensions.
On the other hand, I might just decide to go on the rampage with superglue when I retire.

Look, when I was in states, property taxes started out about $500 a year in our neighbour hood, then increased every second year to where they are averaging $10k a year now.
They said it is to keep the services good, but 90% of it goes into the blackhole of politicians made debt. When people cannot pay, after 3 years the property may be legally seized by the county and sold off to settle the debt. now if they owed 30k for 3 years with fines and late payments added in this could go to 100k.
This is what you are headed for.

Landlords should NOT have to pay this €100 tax on top of NPPR, prtb charges, .75 mortgage interest relief, etc etc … The list goes on… Are any groups getting together to stop this madness? Selma your quoted website in existence yet?

What about private developments which haven’t been taken over by a local council? These householders are already paying their management companies for services each year. These management charges cover road maintenance, PL insurance, lighting, road cleaning and waste collection. The only service received from the council is water which is due to be metered in the near future. Why are they paying councils for services already paid to the management company?

The Brits do pay a property tax, but they don’t pay the extortionate amount of stamp duty that people who bought in recent years had to pay. I bought my first home in Ireland in 2008 and paid €25k stamp duty – because I had previously lived in England and owned a property there I wasn’t classed as a first time buyer here. Now I’m being asked to pay even more tax for my property. It simply is not fair and reasonable.

I inheited my family home and it is not let out and never has been. I live in Dubin in my own house. I already have to pay NPPR on this second home, do I have to pay this additional property tax charge as well? I think this in very unfair.

Mr Iverson suggest not paying his property tax, why stop there…..why not just
refuse to pay income tax as well?
Democracies may often be inneficient, but sadly it seems to be the only viable option right now. If you want to live in a free demcratic society you need to financially support it – pay no taxes and you will ultimately have anarchy in your country.

you have to pay them every year – the NPPR is for second properties (ie investment or holiday homes) and is €200 per year and the household charge is €100 per year per property whether it’s your principal residence or an investment property and there are plans to turn this into a a value-based property tax

Thanks Edel
I want to register my appartment with the Rental Allowance Scheme. They say I have to prove that I payed the NPPR, but I only own one appartment. The one I am living in is not owned by me. Maybe they made a mistake. I will ask them.